UN: Developing countries should ban Bitcoin ads

The UN believes that crypto can pose a threat to the monetary sovereignty of developing countries. It therefore recommends strict rules to limit its use.

Regulate crypto

In a recently published policy letter, the UN advised developing countries to take action against crypto. The UN warned of the risks associated with leaving the crypto industry unregulated.

In the paper entitled “All that glitters is not gold”, first published in June, the United Nations Conference on Trade and Development (UNCTAD) stated that the disadvantages of cryptocurrencies for these countries far outweigh the benefits they can bring to individuals and financial institutions. The document even suggests that developing countries should introduce mandatory registration of all crypto-wallets. In addition, it requires that ads related to cryptocurrencies be banned.

“This is not about approving or rejecting cryptocurrencies. It is about the social risks and costs associated with cryptocurrencies. This is a recommendation that applies to speculative or risky financial products whose returns are uncertain.

Says Penelope Hawkins, an economist at UNCTAD.

The organization also warned that cryptocurrencies could hurt the financial stability of developing countries. In addition, cryptocurrencies can enable illegal financial activities, prevent authorities from restricting capital flows and jeopardize countries’ monetary sovereignty by replacing domestic currencies.

“Make cryptocurrencies less attractive by taxing”

The letter advised governments to make the use of cryptocurrencies less attractive by levying taxes on transactions using the technology. In addition, it recommended requiring mandatory registration of digital wallets and cryptocurrency exchanges. It also put forward the idea of ​​banning financial institutions from owning digital assets. In addition, they will prevent financial institutions from offering crypto-related services to customers.

Developing countries should restrict or prohibit the advertising of cryptocurrencies in public places or on social media platforms. So the conference also suggested that there is an urgent need for consumer protection in countries with low financial understanding. “These ads can lead to significant losses.” According to the letter

Roll-out of CBDCs

Rohan Gray, a law professor at Willamette University College of Law, has worked as a consultant to the United Nations on digital currencies. He said the lack of regulation regarding cryptocurrencies has hurt consumers by enabling fraud and deception.

The letter’s last piece of advice is that countries should develop their own payment systems. This should be done in much the same way as the infrastructure built by the government. In addition, they should explore the possibilities of a central bank’s digital currency (CBDC).

CBDCs are a digitized form of fiat money issued by public monetary authorities. While some CBDCs function in the same way as cryptocurrencies, they are issued by governments and their value is supported by them. A few developing countries have already introduced CBDCs, such as the Bahamas, calling their version the Sand Dollar.

“You do not have to worry that the money itself has no value anymore as you do with stack coins. $ 1 spent by the government can always be exchanged for $ 1 spent by the government. “

– Says Gray

While he believes CBDCs pose risks in terms of oversight and censorship, he said the same concerns apply to stack coins.

The report also refers to China’s efforts to create a CBDC. China is one of nine developing countries that have banned cryptocurrencies. That list also includes Algeria, Bangladesh, Egypt, Iraq, Morocco, Nepal, Qatar and Tunisia.

The increasing use of cryptocurrencies and NFTs

One of the reasons that prompted UNCTAD to release the letter is the increasing adoption of cryptocurrencies around the world. This widespread adoption was accelerated by the pandemic. The ease with which money transfers could be sent drove people to the technology, the letter said. As well as the idea that it could help secure household savings in times of currency depreciation and rising inflation.

There is no uniform political response. Doing too little or intervening too late will lead to higher costs in the future.

– According to the conference

However, it urged the countries to take a forward-looking approach when introducing rules.

In the past, the UN used digital funds to promote various initiatives. Earlier this year, the UN released an NFT art collection called Boss Beauty Role Models. This was part of International Women’s Day, which the organization has been celebrating since 1975.

In 2021, the UN supported a competition called DigitalArt4Climate, in which participants created NFTs designed around the theme of climate change. The winner was allowed to exhibit his works of art during the climate conference in Scotland.

That same year, UNICEF announced the launch of an NFT series on Ethereum to celebrate its 75-year history. In addition, it was intended to raise money for the Giga initiative, which provides internet connections between schools around the world.

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